The Ball Dropped, Rates Didn�t

However, New Years Eve gave New York City hoteliers a big surprise.  A special Trends sample of 75 Manhattan hotels showed occupancies actually lower for New Years Eve 1999 than they were for New Years Eve 1998. Nevertheless, the Millenium Celebrations allowed New York hotels to achieve room rates an extraordinary 56 percent higher than the prior year.  New Years Eve 1999 had an occupancy of 79.9 percent versus 88.6 percent the prior year.  Manhattan�s hotels achieved a whopping average room rate for this event of $365.57 compared with $234.83 the prior year.

During 1999, Manhattan added about 1,700 new and renovated rooms to a supply which at year-end totaled slightly more than 56,000. Despite these additions, Manhattan hotels achieved an annual occupancy of 81.6 percent. While overall occupancies for the year and the month were slightly down from 1998 levels of 81.8 percent and 79.1 percent, respectively, they were still at levels that anyone would consider very healthy. Occupancy rates for the year increased at 40 percent of the hotels in our sample. Even with the overall slight decrease in the occupancy rate Manhattan increased the number of occupied rooms for the year by 1.3 percent.

Average daily room rates for 1999 increased by 5.4 percent to a record-breaking level of $226.16. For the final month of the year overall average daily room rates for the 86 hotels went up by 14.7 percent also to a record-breaking level of $280.38.

PKF Consulting anticipates that these high occupancy levels will continue for 2000, with room rate increases moderating somewhat to about 4-5 percent over 1999 levels. The basic dynamics of the New York City market will remain - strong demand generated by business, tourist and group travelers. Additions to the supply of rooms should help travelers find accommodations on the estimated 200 to 250 nights when Manhattan is effectively full.

PKF Consulting is an international consulting and real estate firm specializing in the hospitality industry.  PKF Consulting, along with The Hospitality Research Group and hotel brokerage affiliate Hospitality Asset Advisors Incorporated are all wholly owned subsidiaries of Hospitality Asset Advisors International, a U.S. Corporation.  The firm has offices in New York, Boston, Philadelphia, Washington DC, Atlanta, Houston, Dallas, Los Angeles, San Francisco, and Singapore.